Medicare Drug Plans and Medicare Advantage Plans

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Medicare Drug PlansandMedicare Advantage Plans

• Presentation to P1 and P2 Classes
• Spring 2006

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Medicare Study Guide

• Know how Medicare Parts A, B and D differ in
  terms of focus and determination of premium.
• It is not necessary to know what is included and
  excluded within Parts A, B and D.
• Know what is meant by dual eligibles and how
  they are treated under Part D.
• Know the difference between medigap and
  Medicare Advantage policies.
• Know what determines the patients Part D costs.

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Medicare Decision Tree
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Medicare Basics

• Who are eligible?
• People 65 and older.
• People who are not yet 65 but who have received
  Social Security disability for 24 months.
• People with End-Stage Renal Disease.

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Medicare Components-1

• Part A Hospital
• No premium
• Inpatient care in
• Hospitals
• Skilled nursing facilities (only after a 3-day
  hospital stay)
• Home health care
• Durable medical equipment (wheelchairs, hospital
  beds, oxygen and walkers)
• Hospice
• Deductables

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Medicare Components-2

• Part B Outpatient
• Up to 2006, the premium was based on 25 of the
  cost to administer the program.
• Beginning in 2007, the premium will be based on a
  sliding scale with income calculated by an
  elaborate formula.
• Subtract income earned in American Territories
  (Puerto Rico) and education savings bonds.
• Add tax-free interest earned or accrued (IRA,
  401k and tax-free bonds).

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Levels progress from 25 of costs
to 35 50 65 80
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Part B Coverage

• Bone mass every 24 months.
• Lipid screens every five years.
• Colonoscopy every 10 years (unless polyps
  discovered in an earlier screen)
• Diabetes-depending presence of risk factors
• Flu shots,
• Glaucoma Tests
• Hepatitis B shots if at risk
• Pap test and pelvic exam every 12 - 24 months
• Pneumococcal shot
• PSA every 12 months
• Mamograms every 12 months
• Welcome to Medicare Physical Exam (one-time).

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Part B caveats

• Coverage is optional
• To avoid the 10 per year premium penalty, the
  person must sign when first eligible.
• If eligible, but otherwise covered by employer
  paid medical insurance or covered under a working
  spouses policy, Part B can be delayed.
• The employer or spouses employer must provide a
  letter stating that the person was insured.

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Part B Exclusions

• Deductables, copayments, etc
• Dental care
• Cosmetic surgery
• Custodial care
• Eye refractions and glasses (medical part of
  the exam covered)
• Hearing exams and aids
• Long-term care
• Orthopedic shoes
• Routine foot care
• Annual physical exams
• Most screening and laboratory tests.
• Most vaccinations (except influenza,
  pneumococcus, Hepatitis B)
• Some diabetic supplies
• Syringes
• Insulin
• Unless the insulin is used with an insulin pump
  or offered through a Part D Prescription Drug Plan

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Medigap Insurance Plans-1

• These plans cover
• Parts A and B deductables and limitations
• Part B co-pays
• They usually only cover Medicare-approved
  procedures and conditions.

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Medigap Insurance Plans-2

• Part A Examples of Deductables (covered by
  Medigap policies)
• 952 for a hospital stay of 1-60 days each
  benefit period
• 238 per day for days 61-90 of a hospital stay
  each benefit period.
• 476 per day for days 91-150 of a hospital stay
  each benefit period.
• All costs for each day of a hospital stay over
  150 days.
• 0 for first 20 days in a skilled nursing
  facility each benefit period.
• 119 per day for days 21-100 in a skilled nursing
  facility stay each benefit period.
• All costs for each day of a skilled nursing
  facility stay each benefit period.

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Medigap Insurance Plans-3

• Part B Examples of Deductables (covered by
  Medigap policies)
• 20 of the Medicare-approved amount for most
  doctor services, outpatient therapy, preventive
  services and durable medical equipment.
• 50 for most outpatient mental health services

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Part D Prescription Drug Plans-1

• Review
• Part A is entirely operated by the Center for
  Medicare Services (CMS) and automatically
  includes everyone receiving a Social Security
  pension.
• Part B is optional and is partially funded by
  premiums deducted from the persons pension
  check.
• Parts A and B pay providers based on fees set by
  the Center for Medicare Services and varies with
  the region where the providers are located.
• Massachusetts Medicare averages 7,000 per
  patient.
• Oregon Medicare averages 2,000 per patient.

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Part D Prescription Drug Plans-2

• Overview
• Part D does receive a Federal subsidies, but is
  operated by private insurance companies.
• The Center for Medicare Services is prohibited
  from negotiating drug prices for Part D plans.
• The Dept of Defense, Veterans Administration,
  Federal prison system do negotiate drug prices.
• Part D insurance plans are formulary dependent.
• Recent regulations now prohibit an insurance
  company from deleting a drug from its formulary.
  It may add a drug.
• Excluded drugs include
• Benzodiazepines
• Prescription vitamins (calcitriol and sustained
  release niacin added back).

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Part D Prescription Drug Plans-3

• Initial Coverage.
• Initial deductable ranges from 0 - 250
• For the next 2,000
• Client pays 25 (500)
• Plan pays 75 (1,500)
• Summary Client has paid 750 on the first 2,000
  of drug costs.

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Part D Prescription Drug Plans-4

• Coverage Gap (Donut Hole)
• Clients pays 2,850 out-of-pocket costs for drug
• 750 2,850 3,600 out-of-pocket
• Clients can take advantage of any prescription
  discount program or state assisted programs while
  in the donut hole.
• Catastrophic Coverage
• Clients pay
• 2.00 for each generic drug
• 5.00 for each brand name drug
• Or 5 of cost of each prescription whichever is
  higher.

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Part D Late Enrollment Penalty-1

• Start with the National Average Premium (NAP) and
  assume an annual increase of 5.00/month
• 2006 32.50/month
• 2007 37.00/month estimated
• 2008 42.00/month estimated
• 2009 47.00/month estimated

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Part D Late Enrollment Penalty-2

• Calculation of the penalty.
• Start with the National Average Premium
• Penalty 1 per month
• After May 15, the person must wait 7 months (June
  December)
• Next open enrollment
• Nov 15, 2006 for policies beginning Jan 1, 2007
• Calculation for 2006
• NAP x 1/month x 7 months penalty
• 32.50 x 0.01 x 7 2.28/month added to
• the 2007 premium

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Low Income Subsidies

• Definitions are complex and are dependent on
  marital status.
• Medicaid drug plans have been rolled into Part D
  Medicare
• Dual Eligible Clients
• Eligible for both Medicaid (Oregon Health Plan)
  and Medicare
• Automatically enrolled into a plan on May 1
  unless the client has picked a plan.
• Low income clients greatly benefit from the
  Federal subsidies.
• With Part D, many PhRMA companies have
  discontinued or greatly restricted their drug
  availability programs.

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Medicare Advantage Programs

• The insurance company receives
• Part B premium
• An additional premium from the client
• A Federal subsidy
• Types
• With or without drug coverage
• If without, client must enroll in a Part D plan
• HMO with a primary gateway physician
• PPO with larger co-pay for an out-of-network
  physician